Student Loans, Debt and Need For Better Days Ahead

Any good work happening in a nation should solve some of its pressing problems. There is a lot of good work happening around in U.S. which should solve problems of colossal scale and move the nation in a decent trajectory. While the nation came good in few areas, there are certainly few other areas where the country evolved into a colossal mess. One of those areas is the student debt where the nation has unleashed a trillion-dollar burden on the young shoulders. How the nation reached this point without checks and balances is a difficult question to answer, particularly in a developed rational country. Today the total student loan debt is 1.75 trillion dollar. To put in perspective, this amount is approximately equal to the total economy of Brazil or Canada – the 9th or 10th largest countries in the world in terms of GDP. This colossal numbers burdening the young students is unheard of in any part of world. 

When you work hard, it should make life easy for the youngsters. But the U.S. student loan program has drowned 1 in 2 students into debt. The education till high school is completely free in U.S. which is great. But the colleges, both public and private, charge astronomically high fees which force the students to opt for loans. This is not just for international students where students from countries like India pay hefty amounts but the in-state students as well need to cough up huge money for college education. A student typically need to bear an upward of 15 thousand dollars an year for four-year college or 60 thousand to complete a degree. This translates to 12 lakh rupees for a year or 50 lakhs for four years which is just an average number. Not anyone or not everyone can certainly afford these huge rates which brings the loan programs into picture. I paid just 1 lakh rupees(22k a year) or just $1200 for my excellent four-year under-graduate tuition back in India. I enjoyed every day and never got burdened with these student loans despite being from economically challenging situation. Those are the good old great days in India. But the average student loan debt in the US is $34,100 for a 4-year bachelor’s degree overall. In public colleges, the average 4-year debt is $31,900, whereas, in private colleges, the number stands at $58,600. What a pity.

Federal student loans can help students pursue higher education if they are not able to afford the rising cost of college on their own. What a statement and what a help. Loans for the rescue or students falling in debt trap very early in their lives. By the way things have panned out, the latter comes as accurate view. When students can get loans, colleges can raise tuition or is it the other way around - when colleges raise tuition, students can get loans. The first statement carries weightage in the crooked world of U.S. Average tuition, room and board at four-year private colleges has risen 800 percent since 1980, more than five times the rate of inflation. Today, the four-year degree at a private college cost around $200,000 on average, before discounts. The same degree at a public college costs more than $100,000 on average. Scholarships and grants bring the price down for many students, but the average student face many hurdles.

 

A substantial and growing share of students pay far more than average and gets into tens of thousands of dollars – and in some cases hundreds of thousands of dollars – in debt just for getting a shot at higher education. At University of Alabama, a state university where many attend from out of state, students pay $45,000 per year or $180000 over four. Even after grants or scholarships are factored in, many Alabama students take in tens of thousands of debt or in some cases more than $100,000. Then there is graduate school – including medical and law school – which account for 40 percent of all student debt in U.S. At the University of Southern California’s dental school, tuition, room and board cost $152,000 - just for the first year.

 

Student debt is both a cause and consequence of those higher costs. The government gives families a free hand to attend a school of their choice, regardless of the price. The colleges have abused their tremendous pricing power – the more colleges raise tuition, the more Americans borrow. The more Americans borrow, the more colleges raise tuition. Otherwise, when an average Joe cannot afford college and rely on loans, how come pricing model puts the fee sky-high. It is with the determination, courage and assurance that student loans are available and easily accessible. Numbers don’t speak a different story either. More than two-thirds of under-graduates borrow owning an average of $29000. A generation ago, it was rare to owe $60000 in student loan, now more than 7 million Americans owe that much. A million borrowers owe more than $200,000. At least a hundred owe over $ 1 million. As of 2022, 43.5 million Americans have federal student loans. Approximately 13% of all Americans had federal student loan debt in 2021. When it is ‘all Americans’ it means 13% of Americans from all age groups – from infant, kid, teen, adult to oldage including those who don’t have anything to do with college. To narrow it down, 47% of women hold student loan debt and 40% of men hold student loan debt. When you are staring at 1 in 2 individuals with student loans, it adds up to a colossal problem.

 

Loans can be good and bad too. Some loans put us in fiscal discipline and adds to our value, other don’t. These student loans, in a way, are bad. Any student opt for these high loans, so that he can get a good job and repay them completely. For many borrowers, these promised high paying jobs never materialized, leading to a wave of defaults. Eight million borrowers are on a default of a student loan. Many rely on the federal programs coming to their rescue too. The debt program was supposed to reduce the inequality, leveling the playing field for society’s most disadvantaged. Instead, it has increased inequality, harming many borrowers it has intended to help. Minority students struggle the most with student debt. Black borrowers are three times as likely as white borrowers to default. Nearly 4 in 10 Black borrowers who started college in 2000s defaulted.

 

From all this, it can be highly inferred that these student debt programs haven’t created the healthy eco-system it intended to. When 92% of these loans are given by Government under federal loans, there has to be clear demarcation for bad signs, bad players and trouble brewing long back. If government cannot regulate private it can be understood but if government cannot regulate government, then there is no excuse. More than anything, the young populace of the nation cannot be burdened with these loans. The good work needs to be passed on and their loans should be waived-off to give a semblance of hope and freedom. This colossal mess should be cleaned up and see to it that there is no repetition in future. The students need to enjoy their best days in college; not get suppressed, depressed under the weight of these loans.